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# In October 1987 the United States stock market suffered a ma

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In October 1987 the United States stock market suffered a ma [#permalink]  26 Feb 2019, 11:54
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Question Stats:

56% (00:37) correct 43% (01:59) wrong based on 16 sessions
In October 1987 the United States stock market suffered a major drop in prices. During the weeks after the drop, the volume of stocks traded also dropped sharply to well below what had been the weekly average for the preceding year. However, the volume for the entire year was not appreciably different from the preceding year's volume.

Which of the following, if true, resolves the apparent contradiction presented in the passage above?

(A) Foreign investors usually buy United States stocks only when prices are low.
(B) The number of stock buyers in 1987 remained about the same as it had been the preceding year.
(C) For some portion of 1987, the volume of stocks traded was higher than the average for that year.
(D) The greater the volume of stocks traded in a given year, the lower the average price per share on the United States stock market for that year.
(E) The volume of stocks traded rises and falls in predictable cycles.
[Reveal] Spoiler: OA

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Re: In October 1987 the United States stock market suffered a ma [#permalink]  26 Feb 2019, 18:22
Carcass wrote:
In October 1987 the United States stock market suffered a major drop in prices. During the weeks after the drop, the volume of stocks traded also dropped sharply to well below what had been the weekly average for the preceding year. However, the volume for the entire year was not appreciably different from the preceding year's volume.

Which of the following, if true, resolves the apparent contradiction presented in the passage above?

(A) Foreign investors usually buy United States stocks only when prices are low.
(B) The number of stock buyers in 1987 remained about the same as it had been the preceding year.
(C) For some portion of 1987, the volume of stocks traded was higher than the average for that year.
(D) The greater the volume of stocks traded in a given year, the lower the average price per share on the United States stock market for that year.
(E) The volume of stocks traded rises and falls in predictable cycles.

Can you please share us the full explanation.
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Re: In October 1987 the United States stock market suffered a ma [#permalink]  13 Mar 2019, 14:43
Expert's post
In October, the volume of stocks traded dropped significantly. For the whole year, though, the volume of stocks traded was normal. How could we resolve this paradox? The answer should jump out immediately: maybe another month had a much higher than average volume of stocks traded. Then that month would balance out October and bring the overall volume back to average. I'm entering into the choices assuming that will be the answer.

(A) The prompt does not distinguish between foreign and domestic investors. The "volume" can be taken to include all investments, foreign included.

(C) Here's our expected answer. At some point in 1987, the volume was higher than normal, balancing out the slow month of October.

(D) The prompt doesn't really care about the price of stocks. They are mentioned, yes, but the paradox is only about volume. And we aren't told anything about prices for the year.

(E) This is close, but not as specific as choice C. Primarily, we aren't given any information about the cycles. For example, maybe the cycle repeats itself every day, and should even out over a month; or maybe it repeats only every few years. Most importantly, we aren't told whether or not this drop in October fits the predicted cycle or not.
Re: In October 1987 the United States stock market suffered a ma   [#permalink] 13 Mar 2019, 14:43
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